The Rudd Government's decision to tax mining companies' "super...

The Rudd Government's decision to tax mining companies' "super profits" triggered a $6.7 billion plunge in major mining stocks yesterday as investors became nervous about the financial impact of the changes.

BHP Billiton took the biggest hit, with $4 billion wiped from its books, Rio Tinto lost $1.3 billion and Fortescue Metals Group was down $587 million.

Atlas Iron lost $61 million, the nation's biggest gold miner, Newcrest, lost $499 million and mineral sands miner Iluka Resources lost $117 million.

While analysts said some of the fall was due to the super profit tax announcement, all miners had been losing ground since last week because of concerns about the global economy and plans by China to restrain bank lending to counter inflationary pressures.

Prime Minister Kevin Rudd defended the looming tax attack on the big miners, saying it would mostly hurt multinationals with high foreign ownership.

"BHP's 40 per cent foreign owned. Rio Tinto's more than 70 per cent foreign owned. That means these massively increased profits, built on Australian resources, are mostly in fact going overseas," he said.

Treasury has calculated that of the $215 billion in profits generated by Australian resource projects over the past five years, more than half has gone overseas.

It is understood that senior members of Cabinet are readying for considerable blowback from WA over the new tax and have practically abandoned any thought of Labor picking up any more seats at the next election. Labor only holds four of WA's 15 Federal seats.

Opposition Leader Tony Abbott would not rule out voting against the 40 per cent slug, even though the Government has tied it to super- annuation investments and infrastructure spending.

But coalition opposition to the new tax may prove academic given the legislation will not hit the Senate until late next year, when Greens are likely to hold the balance of power in the new-look Upper House.

Yesterday a Queensland billionaire claimed that he had abandoned a WA mining project because of the new tax.

Mining magnate Clive Palmer, who is bankrolling a WA Nationals advertising campaign, said two projects - one in WA and another in South Australia - would not go ahead because of the tax the Government plans to introduce in 2012.

"There are a number of projects that have yet to be announced we won't be proceeding with," Mr Palmer said last night. "There are no announced projects that have been canned. We won't go ahead with them with a resource rent tax at 70 per cent. They are not viable."

Mr Palmer refused to detail which projects would be ditched but he confirmed existing WA projects, including his planned $2.7 billion Balmoral South one billion tonne mine, would still proceed. Balmoral South, if it gets investor backing, would be hit with the super profit tax.

His claim of a 70 per cent resource tax combines the 40 per cent tax on super profits and the current company tax rate of 30 per cent. It leaves out State royalties, which are refundable from the Federal Government under the super profits tax plan.

Resources Minister Martin Ferguson, who is in WA talking to mining companies about the plans, said Mr Palmer should be upfront about the projects he was planning to can.

"I've got no personal knowledge of Clive Palmer's supposed pipeline of investments, but I would urge Clive Palmer to engage in Treasury's high-level tax consultations and in doing so take Treasury through his current and planned resource investments," Mr Ferguson said.

"In essence, open his books to Treasury scrutiny and enable us to better understand his concerns as other companies are doing."